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The Loan Scheme The Loan and the Student Loan Centre Funding of the Scheme Improvement and Future Developments

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Higher education is a key factor of social mobility. A HE degree has significant advantages for the individual and for the society as well, therefore it is fair to share its costs. Higher education places significant burdens on the individuals and the families.

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General access, universal Considerable but easily repayable loan size with free use Self-sustaining and self-financing

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No credit scoring, no collateral Wide eligibility Income contingent repayment, no fixed tenor Optional but maximized loan amount Grace period for repayment, free prepayment No general interest subsidy Can be collected as taxes Single risk pool with single interest rate

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Covers all expenses of the scheme, but no more Three elements of the interest rate: average cost of funding risk premium operation premium Current rate: 8.50 %

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Aggregate number of student loans taken out by students (300,000 by October 2010)

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WITH student loan WITHOUT student loan Earning 33%48% Family support 25%38% Study scholarship4%7% Support from institute2% Grants from the state2% Other revenue2% Student loans32%0% Total: (HUF 90,427) EUR 321 (HUF 70,476) EUR 250 The impact of loan on students’ revenue Based on TÁRKI Social Research Institute’s data

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Principles State guarantee on the liability side, financing plan approved by the Minister No financial burden on the central budget Funds raised from money and capital markets All funding costs charged on the borrowers Built-in mechanisms for avoiding interest rate volatility Optimization of cost-risk trade-off

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On the way to self-financing Expected 2010 figure: 90% 3 levels of self-financing Main task: debt management

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Funding in numbers (EUR million) Renewing the portfolio in every 3 years

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Impacts of the crisis frozen capital markets in 2008 lack of liquidity and jumping costs of funding rising student loan interest rate Handling of the crisis new funding strategy (focus on liquidity and flexibility) proactive crisis management Result no damage to the system